Toll-Free
Account Assistance to Taxpayers Is Professional and Timely, but
Improvement Is Needed in the Information Provided

February 2004

Reference
Number:2004-40-057

This report has cleared the Treasury Inspector
General for Tax Administration disclosure review process and information
determined to be restricted from public release has been redacted from this
document.

February
27, 2004

MEMORANDUM FOR
COMMISSIONER, WAGE AND INVESTMENT DIVISION

COMMISSIONER,
SMALL BUSINESS/SELF-EMPLOYED DIVISION

FROM:Gordon C.
Milbourn III /s/ Gordon C. Milbourn III

Acting Deputy Inspector
General for Audit

SUBJECT:Final Audit Report - Toll-Free Account
Assistance to Taxpayers Is Professional and Timely, but Improvement Is Needed
in the Information Provided(Audit #
200340045)

This
report presents the results of our review of the Internal Revenue Service’s
(IRS) toll-free telephone assistance program for account questions.The overall objective of this review was to
provide an assessment of the quality of taxpayers’ experiences with the
program.This audit was part of the
Treasury Inspector General for Tax Administration’s Fiscal Year (FY) 2003
Annual Audit Plan.

Each
year, millions of taxpayers call the IRS for assistance in understanding the
tax law and meeting their tax obligations.During FY 2003, the IRS handled over 55 million telephone calls.These calls included over 26 million calls
from taxpayers who had questions about their accounts and who chose to speak
with a Customer Service Representative (CSR).

With
the continued demands from taxpayers for assistance, the quality of service to
taxpayers remained among the major management challenges the IRS faced in FY
2003.While it is the IRS’ goal to
provide taxpayers with quality tax assistance comparable to the best available
in the private and public sectors, over the years, the IRS has faced challenges
in providing quality service to meet the needs of taxpayers.

One
of the IRS’ major strategies for FY 2003 was to increase the quality and
efficiency of communications and services provided to taxpayers by improving
critical business processes.The aim
was to provide prompt and courteous responses to all requests for
assistance.The IRS’ goal is to make
its telephone operation a “world-class customer service organization” that
provides taxpayers with accessible and accurate tax assistance.

In
summary, from a judgmental sample of 191 calls monitored between April 21 and
May 16, 2003, we determined that CSRs treated taxpayers professionally for 99
percent of the calls and provided timely service for 83 percent of the
calls.In addition, 78 percent of
taxpayers (149 of 191 monitored calls) received accurate answers to their
account questions.Using a statistical
sample during the same period we reviewed, the IRS reported rates of 100 and 97
percent, respectively, for professionalism and timeliness, and 88 percent for
customer accuracy.The IRS defines
customer accuracy as giving the correct answer with the correct
resolution.

In
our sample, CSRs did not always follow IRS procedures; this prevented 22
percent of the taxpayers (42 of 191) from receiving the correct answer or
resolution.We identified (scored) the
response as inaccurate if the response provided was either incorrect or
incomplete.

We
also identified an additional 12 of the 191 calls in which the CSR did not ask
the caller all 5 required identification probe questions.IRS
guidelines require the CSR to fully authenticate the caller as authorized to
receive the information with five required identification probe questions before providing an answer to the taxpayer’s
question.In addition, IRSguidelines currently allow CSRs discretion in asking additional authentication
probes if any of the probes but filing status do not agree with the information
in the IRS computer systems (they must ask additional questions if the
filing status does not match).The IRS
believes that asking taxpayers additional questions might cause additional
taxpayer burden.However, we believe
taxpayers would understand the necessity of additional questions if it were
clearly explained to the taxpayer that the IRS is doing its utmost to ensure
the confidentiality of the taxpayer’s information.

We
recommended that the Commissioner, Wage and Investment Division, ensure IRS
employees receive additional training on the effective and complete use of
Internal Revenue Manual (IRM) procedures and guidelines to address questions
when providing toll-free account assistance.We also recommended strengthening the internal procedures and
requirements to ensure all required probes are asked and verified.If the caller does not provide accurate
information for all five required authentication probes, the IRS should require
the CSR to ask the additional questions (referred to as high-risk questions) to
minimize the risk of unauthorized disclosure.In addition, the IRS should include the errors or omissions made during
authentication probes in its overall customer accuracy or disclose to external
stakeholders that the reported customer accuracy does not include these
authentication errors.

Our
recommendations will provide the following measurable benefits on tax
administration:reduction of taxpayer
burden, improvement to taxpayer privacy and security, and improvement to the reliability
of information.Improving the accuracy
of responses to taxpayer questions will reduce taxpayer burden.Ensuring all five required authentication
questions are asked and verified, and requiring the CSR to go to high-risk
questions if any of the five required authentication questions are answered
incorrectly, would minimize the risk of unauthorized disclosure of taxpayer
information.Including the disclosure
error in its reported customer accuracy will improve the reliability of the
information the IRS reports to its stakeholders.Appendix IV of this report provides a detailed description of
these benefits, which will be included in our Semiannual Report to the
Congress.

Management’s
Response:IRS management partially agreed to our recommendations.IRS management agreed that most account
errors negatively affecting Customer Accuracy are caused by the incomplete
research or inaccurate interpretation of account reference materials.IRS management also agreed that the IRM and
Account Resolution Guide can be improved to make it easier for the CSRs to
understand and comply with authentication procedures.IRS management developed Continuing Professional Education
training for FY 2004 that addresses effective and complete use of the IRM
procedures and guidelines.

However,
IRS management did not agree with our position regarding the reporting of
defects related to the authentication process, indicating that the IRS’
classification of this type of defect as a Regulatory Accuracy defect does not
impact the importance that IRS management attaches to taking the proper steps
during the authentication process.IRS
management disagreed with our assumption that a defect in the authentication
process has a direct impact on the taxpayer and should be classified as if an
unauthorized disclosure occurred.

IRS
management also disagreed with requiring the use of the high-risk
questions.They believe the current
procedures are appropriate and strike a proper balance between protecting
confidentiality and providing service without unnecessary burden.They also pointed out that our
interpretation on the use of high-risk questions is incorrect with regards to
when those questions are required under current procedures.

Lastly,
IRS management agreed with two of our three reported outcome measures.They did not agree with the outcome measure
listed as Reliability of Information because they believe their reporting
accurately reflects the results of their quality review process.Management’s complete response to the draft
report is included as Appendix VII.

Office of Audit Comment: On page 3 of the IRS’ response, IRS management
stated that we were not correct in saying that if taxpayers’ responses to the
first four probes do not match the IRS’ information, the CSR may ask, but is
not required to ask, additional questions.IRS management explained that if the first two questions on
identification number and taxpayer’s name do not match the IRS’ information,
the IRS advises the caller to check the information and call back.The IRM states that if the taxpayer cannot
confirm the correct address or date of birth, the CSR may request
additional information.If the taxpayer
cannot confirm filing status, the CSR is required to do additional
probes.However, the IRM is silent on
what the CSR should do if the identification number and taxpayer’s name do not
match the IRS’ information.

The IRS does not consider
not adequately authenticating the taxpayer as an error that directly affects
the taxpayer, since he or she was provided with the correct answer or
resolution.However, we believe that
providing information to an individual without fully authenticating him or her
increases the risk that a taxpayer’s confidential information has been
disclosed to an unauthorized individual.This could have a direct impact on the taxpayer.Therefore, we believe these errors should be
reported in customer accuracy.We also
believe not including this information in the reported accuracy rate may affect
external stakeholders’ assessment of the IRS’ performance.As a result, we believe our outcome measure
addressing Reliability of Information is appropriate.

In addition, we
believe requiring the use of the high-risk questions is warranted to reduce the
risk of disclosing confidential information.We believe that the necessity of the additional questions can be
explained to the taxpayer and the additional questions would not be considered
a burden considering the consequences of unauthorized disclosure.While we still believe our recommendations
are worthwhile, we do not intend to
elevate our disagreement to the Department of the Treasury for resolution.

Copies of this report are also being sent to the IRS
managers affected by the report recommendations.Please contact me at (202) 622-6510 if you have questions or
Michael R. Phillips, Assistant Inspector General for Audit (Wage and Investment
Income Programs), at (202) 927‑0597.

According to the April 2003
Internal Revenue Service (IRS) Oversight Board Annual Report, 90 percent of
Americans surveyed viewed the IRS service of providing a toll-free telephone
number to answer their questions as either very or somewhat important to
them.The IRS’ goal is to make its
telephone operation a “world-class customer service organization” that provides
taxpayers with quality tax assistance comparable to the best available in the
private and public sectors.The IRS has
faced challenges in providing this quality service.Though the IRS has been improving the quality of its toll-free
service, the quality of this service continues to be reported by the National Taxpayer
Advocate as one of the most serious problems facing taxpayers.

One of the IRS’ major
strategies for Fiscal Year (FY) 2003 was to increase the quality and efficiency
of communications and services provided to taxpayers by improving critical business
processes.The aim was to provide
prompt and courteous responses to all requests for assistance.

The IRS provides a Tax Help
Line (1-800-829-1040) for individuals and joint filers who need procedural or
tax law information or help to file their individual returns and for general
account information for individuals who file a United States (U.S.) Individual
Income Tax Return (Form 1040), including the Profit or Loss From Business (Sole
Proprietorship) (Schedule C)and
Supplemental Income and Loss (Schedule E).Automated help is also offered on this line.

During FY 2003,the IRS
answered over 55 million telephone calls.These calls included over 26 million calls from taxpayers who had
questions about their accounts and who chose to speak with a Customer Service
Representative (CSR).This is referred
to as the Account Calls Product Line.

CSRs answer account inquiries
and are responsible for providing taxpayers with information on the status of
their returns/refunds and for resolving the majority of issues and questions to
settle their accounts.The IRS defines
an account call as any call:

·Relating to a taxpayer’s account, both individual and
business accounts.

·Regarding entity information (i.e., taxpayer’s or
spouse’s name, address, Social Security Number, filing status, and tax year),
the processing of a tax return, corrections of errors found during processing,
and corrections resulting from adjustments or examination assessments.

·Regarding procedural issues (e.g., where to file a
return, when and where to make payments, etc.).

·Relating to any other questions on refunds or
procedures.

To ensure quality service, the
IRS groups or categorizes calls by topics called Applications and by Wage and
Investment (W&I) Division taxpayers and Small Business/Self-Employed
(SB/SE) Division taxpayers.There are a
total of 10 Applications for the Account Calls Product Line.(See Appendix V for a complete listing of
these Applications.)

CSRs are trained and certified
for each current filing season on specific Applications.For example, if an individual taxpayer calls
to find out where to mail a tax return, the call would be routed to a CSR that
has been trained to handle IRS procedural issues for the W&I Division.If a business taxpayer calls to find out the
taxes due on a business account, the call would be routed to a CSR that handles
balance-due questions for the SB/SE Division.

To measure its customer
service, the IRS uses a quality measurement system called Embedded Quality,
which links employee performance to organizational results related to the
quality of customer service.To
accomplish this, IRS management listens to a statistical sample of live
taxpayer calls from among the Applications and scores the calls using 81 attributes
that are divided into 5 quality measures:

·Customer Accuracy.

·Regulatory Accuracy.

·Procedural Accuracy.

·Professionalism.

·Timeliness.

The customer accuracy,
professionalism, and timeliness measures are reported to the IRS Commissioner
as part of the IRS’ balanced measures.The regulatory accuracy and procedural accuracy measures are reported
internally to IRS management to identify trends and training opportunities.

The customer accuracy measure
is also reported externally to IRS stakeholders, e.g., the Congress and the
General Accounting Office, and as part of the reporting requirement of the
Government Performance and Results Act of 1993 (GPRA).The GPRA requires that all Federal agencies
have appropriate quantitative performance measures.(See Appendix VI for details of the Embedded Quality and a list
of the account calls attributes.)

The
National Taxpayer Advocate stated in the 2002 report that:

[the]
Embedded Quality initiative has the potential to significantly bolster public
confidence in IRS responses through an improved portrayal of program
performance and a heightened engagement of each assistor in the quality
process.Measuring employees on
timeliness, professionalism, and accuracy – qualities that internal and
external users identified as critical to customer satisfaction – will align IRS
performance with taxpayer expectations.

Embedded Quality was first used on the toll-free
operations during the 2003 Filing Season.The IRS remotely monitored over 17,300 taxpayer account calls during the
2003 Filing Season.Although the IRS
has previously measured the professionalism and timeliness of the assistance it
provides, the new measures were baselined in FY 2003 for comparison to future
years.For FY 2003, the IRS’ goal for
toll‑free account customer accuracy was 91.2 percent.The IRS reported 88.5 percent account
customer accuracy for FY 2003.

This review was performed at the W&I Division
Headquarters in Atlanta, Georgia; W&I Division Customer Account Services,
Account Management Office, at the New Carrollton Federal Building in Lanham,
Maryland; the Centralized Quality Review System in Philadelphia, Pennsylvania;
and the W&I Division Customer Account Services, Program Coordination and
Support Office, in Dallas, Texas, and New York, New York.

Our review was limited to monitoring calls made to the 1-800-829-1040
toll-free line by taxpayers asking questions about their accounts.We selected a judgmental sample of calls to
monitor between April 21 and May 16,
2003.Our results cannot be
compared to statistical results reported by the IRS.

The audit was conducted between March and October 2003 in
accordance with Government Auditing
Standards. Detailed
information on our audit objective, scope, and methodology is presented in
Appendix I.Major contributors to the
report are listed in Appendix II.

When taxpayers called the IRS toll-free number with
questions about their accounts, they received professional and timely
service.For our judgmental sample of 191
monitored calls, CSRs treated taxpayers professionally 99 percent of the time
and provided timely service 83 percent of the time.During the same time period using statistical sampling, the IRS
reported rates of 100 and 97 percent for professionalism and timeliness,
respectively.

Using the same attributes the IRS uses in Embedded
Quality, we considered the CSR to have acted professionally if the CSR greeted
the taxpayer upon answering the telephone call, was courteous, used appropriate
language, and ensured the taxpayer’s level of understanding of the answer
provided.The CSR was considered to be
timely if the CSR controlled unrelated or unnecessary dialogue initiated by the
taxpayer and restrained from initiating unnecessary dialogue with the
taxpayer.Results are presented in
Tables 1 and 2.

Table 1:Comparison of the Treasury Inspector General
for Tax Administration (TIGTA) and IRS Rates
for Attributes Comprising Professionalism

PROFESSIONALISM

TIGTA

IRS

Greeting

100%

100%

Purpose Statement

100%

100%

Closing (Telephones)

99%

100%

Ensured Taxpayer
Understanding

100%

97%

Used Appropriate
Language

100%

100%

Courteous

98%

100%

Effective Listening

98%

100%

Apologized

33%

96%

Source:Results of the TIGTA and IRS independent reviews of toll-free account
calls received between April 21 and May 16, 2003.

Table 2:Comparison of the TIGTA and IRS Rates
for Attributes Comprising Timeliness

TIMELINESS

TIGTA

IRS

Avoid Extraneous
Dialogue

99%

100%

Conversation Control

33%

95%

Source:Results of the TIGTA and IRS independent
reviews of toll-free account calls received between April 21 and May 16, 2003.

The IRS deals with more Americans than any other public
institution.For many individuals that
contact the IRS, the CSR is the ‘face’ of the IRS, as they may be the only
personal contact the individual has with the IRS.Providing top-quality service to taxpayers is a key aspect of the
IRS’ mission.Taxpayers expect and
receive professional and timely service, as evidenced by the high rates
reported by the IRS and the TIGTA in these categories.Each positive interaction a taxpayer has
with the IRS will increase the taxpayer’s confidence that the IRS is achieving
its mission.

For the 191 calls monitored, the CSRs provided taxpayers
with accurate answers to their account questions on 78 percent (149 of 191) of
the calls.The IRS reported 88 percent
customer accuracy for account calls using a statistical sample during the same
period we reviewed.The IRS defines
customer accuracy as giving the correct answer with the correct
resolution.Our results are presented
in Table 3.

Table 3:TIGTA
Results of Monitoring 191 Calls

APPLICATIONS

CALLS MONITORED

CORRECT ANSWERS

CUSTOMER ACCURACY RATE

W&I Procedural

12

9

75%

W&I Individual
Master File (IMF) Balance Due

13

9

69%

W&I
Non-Streamlined Installment Agreement

3

3

100%

W&I Refund

26

19

73%

W&I IMF Account

89

73

82%

Employee Tax Account

12

10

83%

Business Master File
Other

11

10

91%

SB/SE Procedural

1

0

0%

SB/SE IMF Balance
Due

10

6

60%

SB/SE IMF Account

14

10

71%

Total

191

149

78%

Source: Results of the TIGTA review of toll-free
account calls received between April 21 and May 16, 2003.

We considered the CSR as answering a taxpayer’s question
correctly if the taxpayer received a correct response or the CSR took the
appropriate action or disposition leading to a correct resolution.

In our sample, CSRs did not always follow IRS procedures;
this prevented 42 of 191 taxpayers from receiving the correct answer or
resolution.For example, when the taxpayer:

·Inquired about a tax refund, the taxpayer was not provided
with the correct amount of the refund.

·Inquired if the IRS had received his or her tax return,
the taxpayer was told the IRS had not received the return, when in fact it had.

·Asked various tax questions about specific tax laws,
the taxpayer was not provided the correct answer(s) to tax law question(s)
because the CSR did not correctly interpret the situation presented by the
taxpayer or did not interpret the law correctly.

·Asked for a location and/or telephone number of a local
IRS office where the taxpayer could receive face-to-face service, the taxpayer
was not provided with the correct address or was provided with an IRS office
location address that was temporarily closed.

CSRs are trained on how to communicate with taxpayers and on
tax laws and IRS procedures.Every
filing season, IRS management certifies that all CSRs have received the
appropriate training.

The IRS Internal Revenue Manual (IRM) provides instructions
on how to respond to taxpayer calls and account questions.The CSRs answering account calls are also
encouraged to use the Account Resolution Guide.The instructions in the Account Resolution Guide are the same as
those in the IRM procedures but are condensed for user-friendly access.

The CSR is required to provide his or her name and
identification number.The CSR is first
required to authenticate the taxpayer; i.e., the CSR must be sure that he or
she is speaking to the correct taxpayer or third party representative
authorized to receive the tax information.

After the CSR authenticates the taxpayer, the CSR is
required to use the IRM guidelines to determine the reason for the call and
attempt to answer the taxpayer’s question(s) or resolve the taxpayer’s account
issue.

When the IRS does not provide accurate information to
taxpayers, they may not be getting their issues resolved, requiring additional
contacts with the IRS and additional taxpayer burden.This could erode taxpayer confidence and compliance.

1.Ensure IRS employees receive additional
training on the effective and complete use of IRM procedures and guidelines to
address questions when providing toll-free account assistance to taxpayers.

Management’s
Response:The
IRS continually analyzes the data and the results of its Embedded Quality
review process.Accounts quality defect
information was used to develop Continuing Professional Education (CPE)
training for FY 2004 that addresses effective and complete use of the IRM
procedures and guidelines.This training is mandatory for FY 2004 CPE.

The
IRS does not consider it a direct impact to the taxpayer when the CSR does not
ask all the required identification probe questions or does not correctly
complete the taxpayer authentication probe.Therefore, the IRS does not include this as an error in the calculation
of customer accuracy and when reporting the customer accuracy externally to stakeholders.

The IRM provides guidelines to ensure the CSR fully
authenticates the caller as authorized to receive the information.The CSR must probe (question) the caller
regarding each taxpayer’s:

(1)Identification
number.

(2)Name.

(3)Address.

(4)Date of
birth.

(5)Filing
status.

If the taxpayer’s responses to the first four probes do not
match the IRS’ information, the CSR mayask additional questions
(referred to as high-risk questions) to help authenticate the caller, but is
not required to ask additional questions.However, if the caller cannot provide the correct filing status used to
file the return in question, the CSR must ask two or more
additional questions to authenticate the caller as someone eligible to receive
information about the account.

Not asking one of the five required probes for a caller is
considered a disclosure attribute not met and is scored as a regulatory
error.This regulatory error is
reported internally, but it is not considered in the calculation for customer
accuracy.The IRS does not consider
this error as directly affecting the taxpayer since the taxpayer received a
correct answer with the correct resolution.

For an additional 12 of the 191 calls monitored, the CSR did
not follow guidelines and ask the caller the minimum required probes.For the 12 calls, the CSR did not ask the
taxpayers’ filing status in 8 calls, did not ask the taxpayer’s name in 1 call,
and did not authenticate the third party or corporate officer in 3 calls.In all instances, the CSR disclosed
information to the caller about the account.Including these errors in our results would reduce the customer accuracy
reported above from 78 percent (149 of 191) to 72 percent (137 of 191) of the
calls monitored.

During the same period we reviewed, the IRS monitored 2,482 calls
and reported 88 percent (2,182 of 2,482) customer accuracy.Had the IRS considered disclosure to affect
its customer accuracy, the IRS’ customer accuracy would have been reduced from
88 percent to 84 percent (2,087 of 2,482) for the calls sampled between April 21 and May 16, 2003.This would have provided a more accurate
portrayal of the IRS’ level of customer service.

CSRs are responsible for knowing with whom they are speaking
and the purpose of the call/contact.They must authenticate each caller as someone entitled to receive
information about a tax return or tax account.Only after authenticating the taxpayer or third party designee should
the CSR disclose information about the account to the caller.

Providing information to an individual without fully
authenticating him or her increases the risk that a taxpayer’s confidential
information has been disclosed to an unauthorized individual.This could have a direct impact on the
taxpayer.It is the responsibility of
all IRS employees to protect confidential taxpayer information and to understand
what is and what is not an authorized disclosure under the provisions of the
law.

We believe that not
adequately authenticating the caller prior to providing tax information should
be an error considered to affect the taxpayer and reported in customer
accuracy.Not adequately authenticating
the taxpayer may be viewed by a court as either carelessness or a failure to
exercise due care.The burden is on the
IRS employee to ensure that the disclosure is authorized.Therefore, under such circumstances, a court
could find that the employee made an unauthorized disclosure of a tax return(s)
or return information.

We understand that the IRS believes that
customer accuracy should reflect only the accuracy rate of the answers to the
account questions and that Embedded Quality was designed to accomplish
this.We believe not including
authentication error information in the reported accuracy rate may affect
stakeholders’ assessment of the IRS’ performance.If the IRS chooses not to include this error in its customer
accuracy when reporting results externally, it should qualify the results by
stating that errors made when authenticating the taxpayer are not included in
customer accuracy.

In addition, we believe that if any information provided by the taxpayer
during the identification probes does not match the information the IRS has in
its records (the first four probes), the IRS employee should be required to go to high‑risk questions.The IRM and Account Resolution Guide
currently allow the CSR discretion in asking additional authentication
probes.The IRS believes that asking a
taxpayer additional questions might cause additional taxpayer burden.However, we believe the taxpayer would
understand the necessity of additional questions if it were clearly explained
to the taxpayer that the IRS is doing its utmost to ensure the confidentiality
of the taxpayer’s information.

2.Strengthen
the IRM and Account Resolution Guide to ensure all required probes are asked
and verified and that the CSRs are required to go to the high‑risk
questions when information in the IRS systems does not match a caller’s
information.

Management’s
Response:IRS management agreed
that improvements to the IRM and Account Resolution Guide can be made to
improve usability and make it easier for the CSRs to understand and comply with
authentication procedures.However,
they disagreed with requiring the use of the high-risk questions.IRS management believes the current
procedures are appropriate and strike a proper balance between protecting
confidentiality and providing service without unnecessary burden.

Office of Audit
Comment:On
page 3 of the IRS’ response, IRS management stated that we were not correct in
saying that if taxpayers’ responses to the first four probes do not match the
IRS’ information, the CSR may ask, but is not required to ask, additional
questions.IRS management explained
that if the first two questions on identification number and taxpayer’s name do
not match the IRS’ information, the IRS advises the caller to check the
information and call back.The IRM
states that if the taxpayer cannot confirm the correct address or date of
birth, the CSR may request additional information.If the taxpayer cannot confirm filing
status, the CSR is required to do additional probes.However, the IRM is silent on what the CSR
should do if the identification number and taxpayer’s name do not match the
IRS’ information.

The purpose of the
recommendation is to reduce the risk that the IRS is disclosing confidential
information.Considering the importance
the IRS and the Congress place on protecting taxpayer privacy, we believe the
additional questions arewarranted to reduce
this risk.We believe that this can be
explained to the taxpayer and the additional questions would not be considered
a burden considering the consequences of unauthorized disclosure.We also understand
that the IRS is concerned with serving as many taxpayers as possible.However, we believe the additional minute(s)
it would take the IRS to ask and the taxpayer to answer the additional
questions is warranted considering the potential disclosure and affect on
taxpayers.

3.Include disclosure errors as a part of the
overall customer accuracy or disclose to external stakeholders that the
reported customer accuracy does not include these authentication errors.

Management’s
Response:IRS management also
disagreed with this recommendation.They stated that accuracy measures (Customer, Regulatory, and Procedural)
were designed to be independent of each other, and there is not an “overall
customer accuracy” measure.The current
reporting is consistent with IRS guidelines for the Strategy and Program Plan
and IRS measures and is consistent with the way Regulatory Accuracy and
Procedural Accuracy non-disclosure related defects are classified and
reported.Changing the current
definition would be inappropriate and would constitute inaccurate
reporting.

Office
of Audit Comment:The IRS includes
in its accuracy rate that which it considers to directly impact the
taxpayer.It considers a disclosure
error to affect the taxpayer only if the disclosure is detected during the
telephone call.As stated, we believe that not adequately authenticating
the caller prior to providing tax information should be an error considered to
directly impact the taxpayer and reported in the customer accuracy rate.Because a disclosure was not identified
during the telephone call does not preclude the possibility that there is a
direct impact to the taxpayer caused by an
unauthorized disclosure.

The IRS did not agree with the outcome measure listed as
Reliability of Information because it believes the reporting accurately
reflects the results of their quality review process.However, we believe this disclosure error should be included in
the customer accuracy rate so that externalstakeholders have sufficient reliable information to assess
the IRS’ performance.

The overall objective of this review was to provide an
assessment of the quality of taxpayers’ experiences with the Internal Revenue
Service’s (IRS) toll-free telephone assistance program for account questions
from April 21 through May 16, 2003.To accomplish our objective, we:

I.Identified concerns raised by IRS call sites in preparation
for the 2003 Filing Season by obtaining and reviewing 2003 Filing Season Call
Site Certifications for indications of concerns or problems.

II.Determined the accuracy and quality of responses by the IRS’
toll-free telephone assistance.

A.Selected a judgmental sample of 229 calls from an estimated population of
approximately 2.7 million toll-free account calls serviced by the IRS between April
21 and May 16, 2003.We selected a
judgmental sample due to limited staff resources while using a monitoring
schedule that was representative of the IRS’ hours of operation at call sites
for answering toll-free account questions.

NOTE:We monitored 229 live calls.Only 191 calls were used to report our results
because 22 were transferred outside of the monitored application, 9 were
disconnected either by the caller or Customer Service Representative (CSR), and
for 7 we were unable to sufficiently research the accounts.

B.Captured the conversation between the CSR and the caller on a
call transcription form and evaluated the technical and procedural accuracy of
the CSR’s response by researching the Internal Revenue Manual for procedures
and regulations and IRS computer systems for the taxpayer account information.

C.Scored each of the 81 attributes for account quality/customer
accuracy on the electronic input form for each call.

D.Computed the critical measures for the 191 calls monitored.

III.Compared the results for each critical measure to the rates
the IRS reported for the same measures, during the same reporting period.

This appendix presents detailed information on the
measurable impact that our recommended corrective actions will have on tax
administration.These benefits will be
incorporated into our Semiannual Report to the Congress.

We selected a judgmental sample of 229 calls from an
estimated population of approximately 2.7 million toll-free account calls
serviced by the Internal Revenue Service (IRS) between April 21 and May 16,
2003.We selected a judgmental sample
due to limited staff resources while using a monitoring schedule that was
representative of the IRS’ hours of operation at call sites for answering
toll-free account questions.Only 191
of 229 calls were used to report our results because 22 were transferred
outside of the monitored application, 9 were disconnected either by the caller
or Customer Service Representative (CSR), and for 7 we were unable to
sufficiently research the accounts.

For 42 of the 191 calls sampled, the CSR
did not always follow IRS procedures and this prevented the taxpayer from
receiving the correct answer or resolution.We considered the CSR as answering a taxpayer’s question correctly if
the taxpayer received a correct response or the CSR took the appropriate action
or disposition leading to a correct resolution.

For an additional 12 of the 191 calls sampled, the CSR did
not ask the caller the minimum required probes or the information the taxpayer
provided did not match the information on IRS data systems.In all instances, the CSR disclosed information
to the caller about the account.For
the 12 calls, the CSRs did not ask the taxpayers’ filing status during 8 calls,
did not ask the taxpayer’s name in 1 call, and did not authenticate the
third party or corporate officer in 3 calls.Including this error in our results would reduce customer accuracy from
78 percent (149 of 191) to 72 percent (137 of 191) of the calls monitored.

For an additional 12 of the 191 calls sampled, the CSR did
not ask the caller the minimum required probes or the information the taxpayer
provided did not match the information on IRS data systems.In all instances, the CSR disclosed
information to the caller about the account.For the 12 calls, the CSRs did not ask the taxpayers’ filing status
during 8 calls, did not ask the taxpayer’s name in 1 call, and did not
authenticate the third party or corporate officer in 3 calls.Including this error in our results would
reduce customer accuracy from 78 percent (149 of 191) to 72 percent (137 of
191) of the calls monitored.

These 12 potential
disclosure errors were not included in the IRS’ reported customer accuracy.The IRS believes that customer accuracy
should reflect only the accuracy rate of the answers to the account questions. Including these disclosure errors would
reduce customer accuracy.Not including
these errors affects the
reliability of the information the IRS reports externally to stakeholders and
could affect their assessment of the IRS’ program.

The Internal Revenue Service (IRS) groups or categorizes
calls by topics called Applications and by Wage and Investment (W&I)
Division taxpayers and Small Business/Self-Employed (SB/SE) Division taxpayers.Based on the taxpayer’s response to
questions, the IRS routes the taxpayer’s call to the correct Application.Customer Service Representatives answer
account inquiries and are responsible for providing taxpayers with information
on the status of their returns/refunds and for resolving the majority of issues
and questions to settle their accounts.The following compares the Treasury Inspector General for Tax
Administration’s (TIGTA) customer accuracy results with the IRS Customer
Accuracy results for the period April 21 to May 16, 2003.

APPLICATION NUMBER

APPLICATION NAME

NUMBER OF CALLS THE TIGTA
MONITORED

TIGTA CUSTOMER ACCURACY

IRS CUSTOMER ACCURACY

5

W&I Procedural

12

75%

91%

10

W&I Individual Master File
(IMF) Balance Due

13

69%

78%

13

W&I Non-Streamlined Installment Agreement

3

100%

60%

15

W&I Refund

26

73%

88%

20

W&I IMF Account

89

82%

90%

25

Employment Tax Account

12

83%

85%

30

Business Master File Other

11

91%

89%

40

SB/SE Procedural

1

0%

100%

45

SB/SE IMF Balance Due

10

60%

85%

55

SB/SE IMF Account

14

71%

86%

Total

191

78%

88%

Source:Results of
the TIGTA review of toll free account calls received between April 21 and May
16, 2003.Results from the IRS’ review
of toll-free accounts call during the same period obtained from the Quality
Review database.

To measure its customer service, the Internal Revenue
Service (IRS) uses a quality measurement system called Embedded Quality, which
links employee performance to organizational results related to the quality of
customer service.As part of Embedded
Quality, calls received on the IRS toll-free Accounts Product Line are measured
against 81 qualities, called attributes.Every call is evaluated using 6 mandatory attributes; the remaining 75
attributes are scored only if they are appropriate for that call.Attributes are divided into the following
five quality measures or “buckets.”

Customer
Accuracy:Giving the correct answer
with the correct resolution.“Correct”
is measured based on whether the taxpayer received a correct response or
resolution to the case or issue and, if appropriate, whether the Customer
Service Representative (CSR) took the necessary case actions or case
disposition to provide this response or resolution.This is the only measure the IRS reports externally.

Regulatory
Accuracy:Adhering to
statutory/regulatory process requirements when making determinations on
taxpayer accounts.

Procedural
Accuracy:Adhering to internal
process requirements.

Professionalism:Promoting a positive image of the IRS by
using effective communication techniques.

Timeliness:Resolving an issue in the most efficient
manner through the use of proper workload management and time utilization
techniques.

The
measures are calculated based on opportunities for defect.For example, if 10 attributes are applicable
in the Regulatory Accuracy bucket for a particular call/case, and 8 of them are
correctly handled, the Regulatory Accuracy score is 8 correct out of 10
opportunities, or 80 percent.

The
scores for the five buckets are never combined with each other to create one
overall quality score; they stand on their own.The buckets are also not weighted to give one bucket more weight
than the others.

The
scores for each bucket for an individual call are calculated at the time the
call summary is submitted as “finished.”Reports can be generated to show cumulative scores for each of the five
buckets for various levels of the organization, product lines, Applications,
etc.

Each
attribute is linked directly to the CSR’s job elements, creating a means of
linking business measures to employee performance.The process creates accountability by connecting employee
evaluations to the quality measurement.Managers use Embedded Quality for planning purposes and to track employee
performance and training needs.

The customer accuracy, professionalism, and timeliness
measures are reported to the Commissioner as part of the IRS’ balanced
measures.The customer accuracy measure
is also reported externally to IRS stakeholders, e.g., the Congress and the
General Accounting Office. The regulatory accuracy and procedural accuracy
measures are internally reported process measures that are reported to IRS
management and other levels of management along with the other three measures.

The following shows how the five Embedded Quality measures
tie into the balanced measures used by the IRS to measure organizational and
employee performance (employee satisfaction, customer satisfaction, and
business results).

The chart was removed due to its size.To see the chart, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.